The Crisis in Uruguay

[NOTE: Agustin Fernandez is a translator for ZNet, from Uruguay. He was asked to provide some insight into the financial collapse there. This is the note he sent to the group of ZNet translators– which was in turn translated into English by Craig M Johnson]

At the beginning of the year 2000, the candidate of the traditional Partido Colorado (the right-wing party), Jorge Batlle, assumed the presidency. The victory was possible thanks to the coalition formed between the Partido Colorado and the Partido Blanco or Partido Nacional (the two political parties of Uruguay) to defeat the in the second round the Progressive Unity-Broad Front (EP-FA), the left party, which received more votes in the first round. The Partido Colorado assumed the presidency (in a coalition with the Partido Blanco) without a plan of government, facing an economic recession. The players on the government’s economic team were the accountant Alberto BensiÃ³n as Economic Minister, Cesar RodrÃ­guez Batlle (Jorge Batlle’s cousin) as director of the Central Bank, and the economist Ariel Davrieux directing the Office of Planning and Prediction, OPP (Uruguay’s principal negotiator with the IMF).

At the time, the beginning of 2000, the country had a 12% unemployment rate and an enormous wave of emigration (according to the data of the private consultancy CIFRA published in the weekly BUSQUEDA on 11/23/00, “fourty-four per cent of Uruguayans would emigrate if they could get work in another country.) The unemployment and the emigration have continued to increase since then; 2002 began with a 14.8% rate of unemployment which has now reached 16% and continues increasing. The wave of emigration (with the US and Spain as principal destinations) carried off 40,000 people between June 2001 and May 2002 (an alarming number considering that we are a country of little more than three million residents.) Owing to the catastrophic policy the economic team was carrying out, appeals were made to the Economic Minister several weeks ago. The appeal was filed by the economist of the EP-FA, Alberto Couriel. The demands did not force the immediate change of the economic team, but initially RodrÃ­guez Batlle was dismissed and days later, when the director met the demand for dismissal that the EP-FA maintained, the president saw himself forced to dismiss Alberto Bension, leaving in charge of said ministry the economist Alejandro Atchugarry, senator for the Partido Colorado. The only member of the economic team still serving his post despite the request for dismissal by the EP-FA is Ariel Davrieux, whom the government defends: “It’s a technical question and Davrieux is the best technician to find himself at the head of the OPP.”

On Tuesday, July 30, a few days after the appointment of the new Economic Minister, a bank holiday was declared. The Central bank argued for this decision due to “repeated violations on the part of Banco Montevideo and Banco Caja Obrera [large banks],” which meant that both banks were practically empty. This was due as much to the withdrawals by depositors (an average of 40 million dollars was withdrawn every day) as to the fraudulent manoeuvres of the Periano brothers, owners of the Banco Montevideo. Among these manouevres: loans to their own companies; accounts (with their owners’ consent) sent to banks in the Carribean which mysteriously closed down soon afterward, the money disappearing; and more.

Two days after the bank holiday was decreed, the looting began. Different from the looting that occurred in Argentina, in the majority of these cases one did not see parents desperate to take some food to their homes. The looters were mostly young, and the stolen goods tended not to be food or articles of primary necessity. Instead, cigarettes and imported whisky were the most looted. One shouldn’t imply that none of the looters were hungry: but the majority were not. The parents, with their children, could be found in restaurants, lining up for four hours for lunch. Due to the lootings all the police were ordered to the streets, especially to the outlying neighborhoods, and helicopters were even sent to watch over the city.

These events created a degree of paranoia such that the greatest worry of the people concerned the lootings and not how to get out of the financial crisis, why we arrived at the crisis, why the Peiranos (who supposedly were to appear before Judge Eguren on Wednesday, August 7) were not in prison, or anything like that. No one benefitted more from all this paranoia than the government. In fact, on Friday August 2 the police were spreading rumors of hordes of looters coming from the outlying neighborhoods heading for the commercial districts. The hordes never appeared.